On May 9, 2019, the House Financial Services Committee voted to establish two task forces dedicated to studying technological innovations that impact the financial services arena: a FinTech Task Force and an Artificial Intelligence Task Force. The FinTech Task Force is initially set to study various issues, including fintech regulation in the domestic and international spheres, alternative data for loan underwriting, and data privacy. The Task Force on Artificial Intelligence will study how artificial intelligence affects how consumers interact with and use financial ...
The SEC recently issued an investor alert warning about crypto advisory and trading websites. The alert cautions investors to be especially wary of web-based cryptocurrency sites with any of these red flags:
- Outsized “guaranteed” investment returns.
- Complicated jargon or difficult-to-understand technologies.
- Unlicensed sellers.
- Sounds too good to be true.
- Unsolicited offers.
- Urgency to act.
…in short, the usual hallmarks of many scams.
The advisory comes on the heels of an indictment against two Nigerian citizens for wire fraud and conspiracy to commit ...
On April 18, 2019, the Financial Crimes Enforcement Network ("FinCEN") announced its first enforcement action against a peer-to-peer virtual currency exchanger. See FinCEN Penalizes Peer-to-Peer Virtual Currency Exchanger for Violations of Anti-Money Laundering Laws, Fin. Crimes Enforcement Network (April 18, 2019) [hereinafter FinCEN Release], https://www.fincen.gov/news/news-releases/fincen-penalizes-peer-peer-virtual-currency-exchanger-violations-anti-money. The enforcement action was against Eric Powers ("Powers") for violations of the Bank ...
As the 116th Congress continues its work in the first session, several new and revived bills have been introduced concerning blockchain and cryptocurrencies. Two of these bills seek to add a formal definition to important terms in the realm of blockchain and cryptocurrencies. Both of these bills has bipartisan support and seeks to add a more formal definition to well-known terms.
The first bill, called the "Blockchain Promotion Act," was introduced in February and has bipartisan sponsors from both the Senate and the House of Representatives. It calls for the Department of Commerce ...
The Financial Stability Board ("FSB") recently released a Crypto-assets Regulators Directory providing background and mandate information for the principal regulatory agencies touching upon digital-asset issues in its constituent jurisdictions.
The Directory covers the FSB’s G20 members, plus Hong Kong, Singapore, Spain, and Switzerland, together with a number of international financial institutions (e.g., the IMF, World Bank, OECD, Basel Committee, and International Organization of Securities Commissions). The Directory will be distributed at this week’s G20 ...
Late last week, the SEC issued a no-action letter widely hailed as its first on a blockchain-based digital token for private jet services. In its TurnKey Jet letter, the Commission Staff indicated it would not recommend enforcement action over the operation of a private, permissioned, centralized blockchain network and smart-contract infrastructure for clearing and payment using a utility-token effectively functioning as a pre-paid jet card (or streetcar token).
See TurnKey Jet, Inc. (Apr. 3, 2019), here.
And the request, here.
CoinDesk reports that the no-action process took ...
This week, the SEC's Division of Investment Management issued a letter seeking industry and public input on custody issues arising from digital assets.
The "Custody Rule," Rule 206(4)-2 under the Advisers Act of 1940, provides it is a fraudulent act or practice to have custody of client assets, unless an adviser complies with Custody-Rule requirements, including among others, by a qualified custodian subject to annual independent audits.
The Division’s recent Guidance Update on custody issues focused on inadvertent custody (e.g. where boilerplate in the adviser’s ...
This term, Congress is set to consider several bills—each with bipartisan sponsorship—targeting the fields of blockchain, cryptocurrency, and fintech. This spurt of legislative activity indicates an increased awareness by lawmakers of both the opportunities for innovation in these fields and the potential pitfalls and risks for illicit use posed by these new technologies. The following are several of the bills that have been introduced this term to date which aim to promote blockchain and cryptocurrency:
- The Blockchain Regulatory Certainty Act (H.R. 528), introduced in ...
The Securities and Exchange Commission issued a Sources Sought Notice on January 31, 2019, seeking a private vendor "to support the goal of acquiring data for the most widely used blockchain ledgers."[1]
In the notice, the SEC did not specify or name the ledgers it wanted to acquire data from; however, the requirement that they gather data from the "most widely used" ledgers suggests that the SEC would want the vendor to be able to gather data from cryptocurrencies such as bitcoin and ethereum.
This step towards data gathering, likely in the realm of cryptocurrencies, is an interesting ...
According to an initial registration statement published on January 10, the cryptocurrency index fund provider Bitwise Asset Management has applied with the U.S. Securities and Exchange Commission ("SEC") to form a new bitcoin-backed exchange-traded fund ("ETF"). The Bitwise Bitcoin ETF Trust seeks approval to issue and redeem shares that trade on the NYSE Arca, Inc. stock exchange in blocks of 25,000 shares. If approved, the Bitwise Bitcoin ETF Trust will be the first of its kind.
Bitwise Asset Management's SEC Form S-1 states that the Bitwise Bitcoin ETF Trust will track the ...